Main points of investment

Event: Tianci released its three-quarter report in 2022. During the reporting period, the company realized operating income of 16.429 billion yuan, an increase of 148.06% over the same period last year. It realized net profit of 4.36 billion yuan, an increase of 180.65% over the same period last year, and realized deduction of 4.255 billion yuan of non-return net profit, an increase of 181.68%. Of this total, 2022Q3 achieved a single-quarter operating income of 6.065 billion yuan, an increase of 107.46% over the same period last year, an increase of 16.32% over the same period last year, a net profit of 1.454 billion yuan, an increase of 88.61% over the same period last year, an increase of 3.25% over the previous quarter, and a net profit of 1.368 billion yuan for non-return, an increase of 83.8% over the same period last year and a decrease of 1.71%.

In 2022 Q1-Q3, overseas and domestic sales of new energy vehicles continued to grow rapidly, superimposing the company's own new production capacity contributed to the increase in product / raw material supply over the same period last year, and the simultaneous increase in the volume and price of related products contributed to the substantial growth of the company's performance compared with the same period last year.

Volume: global production and sales of new energy vehicles continued to improve in the first three quarters of 2022, with the release of new production capacity of superimposed companies, which contributed to a substantial increase in the production and sales of battery chemicals compared with the same period last year. Overseas, according to JATO data, the total number of electric passenger vehicles registered in the five European countries (Germany, France, Britain, Italy and Spain) reached 1.3567 million from January to August 2022, an increase of 8.8% over the same period last year, accounting for 27.07% of passenger car registrations, an increase of 5.27 pcts. On the domestic side, according to the data of the China Automobile Association, the domestic new energy vehicle market continued its previous growth trend from January to September 2022. On the domestic side, according to data from the China Automobile Association, from January to September 2022, the domestic new energy vehicle market continued its previous growth trend, with production / sales reaching 4715,4.559 million vehicles respectively, an increase of 118% and 113% respectively over the same period last year. From the raw material point of view, the company's new production capacity of lithium hexafluorophosphate was fully produced in the first quarter of 2022, driving the company's self-supply ratio of lithium hexafluorophosphate to more than 90%, and the cost decreased significantly. Zhejiang Tianshuo, a subsidiary, is expected to contribute to the increase in VC production capacity compared with the same period last year, and the self-supply capacity of raw materials is further improved. The superposition company added 150000 tons of electrolyte plant to be put into production in the fourth quarter of 2021, and the fund-raising project 70,000 tons of solvent plant and 100000 tons of electrolyte project are expected to contribute to the production increment during the quarter, and the company's 2022Q1-Q3 electrolyte sales are expected to achieve high growth compared with the same period last year.

Price: the profitability of some products is higher than the same period last year. Benefiting from the improvement in the production and marketing of terminal new energy vehicles, the supply and demand of some electrolyte raw materials are tight and profitable. For example, the average Q1-Q3 price of solute lithium hexafluorophosphate in 2022 is 386,000 yuan / ton (year-on-year + 40%), and the profit of the company's related products is expected to increase over the same period last year. Despite the recent decline in the price of lithium hexafluorophosphate from a high level, the company's new electrolyte capacity releases superimposed new lithium salt production, which not only increases the degree of self-sufficiency of raw materials and the scale of product production and marketing, but also brings about an increase in the profitability of the product unit. help the company still achieve growth.

Maintain the "prudent overweight" rating. Tianzi material is a leading enterprise in lithium battery electrolyte industry, and it is one of the few domestic enterprises with the production capacity of key raw materials such as lithium hexafluorophosphate and new lithium salt.

As the increase in the permeability of new energy vehicles drives the demand for power battery electrolytes, the company will fully benefit from the growth of the industry. In addition, with the gradual commissioning of the lithium battery materials integrated layout project and the steady development of overseas subsidiaries such as the Czech Republic, South Korea and Germany, the company's competitiveness of lithium battery materials is expected to be further improved. The company is also one of the main domestic personal care materials suppliers, downstream customers including Procter & Gamble Co, Colgate, L'Or é al and other major daily chemical enterprises at home and abroad, the company continues to launch new products to open up the market. At the same time, the company actively implements the equity incentive plan, which will help to improve the governance structure and promote the long-term development of the company. We adjusted the company's EPS forecasts for 2022-2024 to 3.02,3.51 and 4.17 yuan respectively to maintain a "prudent increase".

Rating.

Risk hint: the promotion of new energy vehicles is not as expected, the price of raw materials fluctuates, and the production of new projects is not as expected.